Through its striking judgment in Prem Prakash versus Union of India, the Supreme Court has dropped another rock into the unquiet waters of India’s anti-money laundering investigation protocol. The bench comprising of BR Gavai J. and KV Viswanathan J ruled that a statement made by an accused to the Enforcement Directorate, while in custody, which implicates them in a separate money laundering case is inadmissible as evidence against them.
The judgement establishes that the protection against self-incrimination and the right to remain silent extends beyond the specific case under investigation or trial. It safeguards the accused from having their statements used against them in other pending or potential cases as well. This principle aims to encourage voluntary disclosure of incriminating information by the accused without fear of it being used against them in unrelated matters.
Therefore, the prohibitive sweep of Article 20(3) of the constitution against self-incrimination seems to have made its way from the contours of criminal procedure to the forefront of investigations under the Prevention of Money Laundering Act, 2002.
Over two years ago, a three-judge bench in the landmark judgement of Vijay Madanlal Choudhary v. Union of India, amongst other aspects ratified that statements made to the ED officers under Section 50 of the PMLA Act are admissible as evidence, unlike the inadmissibility of the confessions to a police officer under Section 25 of Indian Evidence Act, 1872. The bench anticipated a scenario that although the authorities under the PMLA Act are not police officers, there could be circumstances where the protection bearing the nature of Section 25 of the Evidence Act may have to be made available to the accused.
The court indicated that such situations should be assessed on a case-by-case basis. Drawing inspiration from the Vijay Madanlal case (supra), the court in the Prem Prakash case further scratched the surface to examine the admissibility of an incriminating statement under Section 50 of the PMLA Act, made by the accused while in custody for another proceeding initiated by the same investigating agency.
Given the facts of the case, the court observed that a person already in custody for an impending proceeding, cannot be considered to be operating with a free and uninfluenced state of mind when interrogated for another proceeding investigated by the same investigating agency. The Court fittingly remarked that the accused in custody cannot be told that after all the while giving the statement, “you were wearing a hat captioned ‘ECIR 5/2023’ and not the hat captioned ‘ECIR 4/2022”. Therefore, it was held that any statement made by such a person would be inadmissible under Section 50 of the PMLA Act.
The court is suggesting that the statement made by the accused should not be viewed as a statement typically made under Section 50 of the PMLA Act, rather it should be appreciated from the lens of a statement made under Section 25 of the Evidence Act. The reason for such an interpretation is nestled in the kind of environment created in a custodial setting and the involvement of the same investigating authority that may coerce or unduly influence the accused's statements, thereby undermining the voluntariness and reliability of any incriminating disclosures made in such circumstances. In light of this, the court held that it would be grave injustice to allow the statement to be used against the accused especially considering that he was taken from judicial custody to provide the statement.
There is no doubt that the Prem Prakash judgement marks a significant evolution in the interpretation of self-incrimination in anti-money laundering cases, reinforcing the principle that individuals in custody are safeguarded against the use of their statements in unrelated cases. It ensures a fairer investigative process and underscores judiciary’s commitment towards upholding constitutional safeguards along with acting as a refreshing reminder that, irrespective of the nature of the crime, the principles carved out in the constitution will act as an umbrella to offer protection against injustice.
Juvraj Singh Bindra is a partner and Muskaan Garg an associate at Cyril Amarchand Mangaldas.
The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.
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